Core Viewpoint - The CF40 macro policy quarterly report indicates that China's macro economy shows early signs of recovery in 2025, with monetary policy being crucial for stimulating endogenous growth in 2026 [1][2]. Economic Indicators - In 2025, key financial indicators such as the stock market, RMB exchange rate, social financing growth, and corporate deposits have shown significant improvement [1]. - Corporate profits have halted a multi-year decline, and overall consumption and labor market conditions remain stable [1]. Recovery Support - The recovery is primarily supported by fiscal policy, external demand, and prior price adjustments, but investment and the real estate market still face considerable pressure [1]. - The endogenous growth momentum remains weak, and the sustainability of the recovery needs to be strengthened [1]. Policy Recommendations for 2026 - The report emphasizes the need for increased counter-cyclical policy efforts, particularly through active fiscal measures and a focus on monetary policy [1][2]. - It is suggested that broad fiscal spending should be around 41 trillion yuan, with a public budget deficit aligned with 4% of GDP [2]. Monetary Policy Focus - The importance of monetary policy in expanding domestic demand is highlighted, with recommendations to lower the 7-day reverse repo rate, deposit rates, and LPR rates [2]. - A commitment to inflation targets and significant reductions in policy rates are seen as key actions to shift expectations for businesses and households [2][3]. Structural Issues and Market Dynamics - The long-standing "strong supply, weak demand" contradiction is noted as a source of instability in economic growth, with low consumption as a direct manifestation [3]. - To address this, it is proposed that the market should play a decisive role in resource allocation, alongside improving residents' income and social security [3].

Core Viewpoint - The article emphasizes the importance of boosting consumption and expanding domestic demand as a fundamental driver for economic growth in China, highlighting recent government initiatives aimed at enhancing financial support for consumer spending [2][4]. Group 1: Government Initiatives - The People's Bank of China and other government departments have jointly issued guidelines to support and stimulate consumption, focusing on improving financial services in the consumer sector [3]. - The guidelines stress the need for structural monetary policy tools to incentivize credit support for key service consumption areas and to develop diversified financing channels [3][4]. - The government aims to enhance consumer payment services and strengthen the credit system within the consumption sector [4]. Group 2: Economic Context - Internal demand is identified as a fundamental driving force for economic development, with a specific focus on addressing the shortfall in consumption as a major issue facing the economy [4][5]. - In the first half of 2025, the contribution rate of internal demand to economic growth increased by 6.3 percentage points compared to the fourth quarter of 2024, indicating a significant upward trend [5]. - The contribution rate of internal demand to economic growth for the entire year of 2024 was 69.7%, while it reached 86.1% in the first half of 2024, underscoring the critical role of consumption in economic stability [5]. Group 3: Policy Framework - The article discusses a comprehensive policy framework aimed at enhancing consumption through fiscal, tax, and financial measures, leveraging market forces to improve living standards and stimulate consumer spending [5]. - The focus is on creating a conducive environment for consumption by increasing quality supply and improving the overall consumption environment [4][5]. - The article highlights the need for targeted policies to effectively address the structural issues related to insufficient consumption [6].